April 24, 2024

• 

[THE INVESTOR] Market rumors are circulating over a possible battle between the son and daughter of Shinsegae Group Chairwoman Lee Myung-hee over the future leadership of the retail giant, with the latter making a rare public appearance earlier this month and securing two exclusive licenses to operate duty free-shops in a year.

Shinsegae Inc. President Chung Yu-kyung made a surprise visit to Daegu on Dec. 15 to celebrate the opening of Shinsegae Department Store in the city. The event was considered rather surprising as the only daughter of the Shinsegae Group chairwoman has long stayed under the shadow of her elder brother Chung Yong-jin, a vice chairman in charge of discount chain E-mart.

Chung Yu-kyung (left) and Chung Yong-jin

Her brother has been said to have consolidated his power base as the heir apparent of the group, building wide public recognition through public appearances and vibrant social networking online. Chung Yu-kyung, on the other hand, had been lying low by skipping most events until recently.

Chung Yu-kyung’s public debut this month as well as her aggressive strategy of expanding the department store business, despite the slowing economy, appears to signal that she may be refusing to remain as No. 2 on the succession list, according to some industry sources here.

“It appears that Chung Yong-jin is in a favorable position in terms of management performance so far. But recent moves show that the succession is not completed yet, leaving room for competition,” an industry source was quoted as saying by Newsis, a local news agency.

The role of the 44-year-old heiress has been grabbing attention since early this year, as she took the top position at Shinsegae Inc., one of the two core businesses within the company’s retail empire.

The decision appears to have been made by her mother, according to industry watchers at that time, saying it could be the group’s future strategy to divide the empire into two. The two siblings had swapped their shares in E-mart and Shinsegae Inc., soon after, which also supported that theory.

But some suggested that the chairwoman, who holds the largest stakes in E-mart and Shinsegae Inc., may have given them an equal opportunity to compete with each other, testing them to find out who is more suitable for the leader of Shinsegae Group.

Since early this year, Chung Yu-kyung has opened new department stores in Gimhae, Hanam and Daegu, and secured two licenses to operate duty-free shops in Seoul, breaking Lotte’s dominance in the sector. Shinsegae plans to achieve annual sales of 2 trillion won ($1.66 billion) by 2019 -- aiming to take the No. 1 position in the market.

Even if the game is on between the two Chungs, questions remain as to whether she can beat her brother who has also shown significant performance. Chung Yong-jin spearheaded the opening of Starfield Hanam, a mega shopping mall in Gyeonggi Province, and the launch of various brands such as Electro-marts, Peacock and No Brand.

The two could be viewed as competing with each other, but it will be difficult to determine who is going to take the leadership and majority stake from their mother any time soon, said Chung Sun-seob, head of Chaebul.com. Chairwoman Lee, who is a younger sister of Samsung Chairman Lee Kun-hee, holds 18.22 percent each in E-Mart and Shinsegae Inc.

“Shinsegae, like other chaebol families, faces problems when seeking leadership transfer as it costs a lot,” he said, referring to inheritance tax. By law, an inheritance of over 3 billion won is levied with 50 percent of tax.

“In long term, Chung Yong-jin is likely to take a leadership role with his sister supporting him. But it will be difficult to split the group into two -- E-mart and Shinsegae Department Store -- for now as they are interconnected in terms of their characteristics as retail businesses and also their role in supporting the ownership family’s influence over the group.”

By Cho Chung-un/The Korea Herald (christory@heraldcorp.com)